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NCR projects growth in retail self-serve POS, DVD kiosks
Execs at the huge retail- and financial-device firm see retailers upgrading check-out tools as NCR reports respectable 2Q numbers.
August 12, 2010
Sales of self-serve check-out devices to the retail sector are on the cusp of a period of extended growth with new installations in grocery, big box and other large merchants. Meanwhile, consumers in North America will see several thousand more DVD kiosks at local shops by the end of the year.
That and other positives for the self-service and kiosk industries were discussed by top leadership of NCR Corp. during its recent second-quarter conference call with stock analysts. Several analysts pressed NCR executives on its expansion in the kiosk DVD sector and the firm's relationship with troubled Blockbuster Inc.
The Duluth, Ga.-based provider of assisted (or traditional) and self-service hardware and software for the financial and retail industries last month reported net income of $31 million, compared with $23 million in the same three-month period last year. Revenues rose 5 percent to $1.18 billion compared with $1.12 billion in the second quarter of 2009.
NCR's retail division, covering its traditional and self-service point-of-sale devices and kiosks, has seen strong numbers this year with revenues rising 83 percent in the second quarter compared with the same period in 2009, Bill Nuti, chairman and CEO, told analysts. And for the first six months of 2010, retail division revenues were up 63 percent compared with January thru June 2009.
NCR doesn't break out sales of self-service POS devices and traditional devices. But Nuti was particularly pleased with self-service, and with the prospects of the product set.
"In the second quarter, we saw strong revenue and order growth in self-checkout and were encouraged by the mix shift to self-checkout from assisted point-of-sale," he said.
Indeed, self-service now accounts for about 40 percent of the retail division's revenues, up from one-third previously, according to John Bruno, NCR executive vice president. Traditional POS devices account for about 60 percent.
Going forward, Nuti says that self service is poised to keep growing.
"Upgrade cycles tend to run in a four to five-year increments, and based on our conversations with customers, we believe the next cycle will be led by increased adoption of self-service technologies," he said.
Gil Luria, a vice president and research analyst who follows NCR for Wedbush Securities, says the question hanging over NCR is whether Nuti is right on his cycle theory.
"Will retailers spend? If so, (self-serve) will be a great category," Luria said.
In the firm's entertainment division, NCR continues to build on its DVD kiosk rental program with Blockbuster in the North American market.
At the end of the quarter, NCR had about 6,500 installed DVD kiosks and was adding 100 to 200 a week, says Nuti. The firm's goal is 10,000 installed by the end of the year, most carrying the Blockbuster brand name. NCR pays the firm a licensing fee for its brand and a royalty per kiosk, depending on the success of the kiosk.
Analysts were concerned about several events or possible events affecting the entertainment division. It has yet to break even as competition from Coinstar Inc.'s redbox DVD-rental kiosk remains fierce, with redbox on its way to operating as many as 30,000 kiosks. Meanwhile, NCR needs to nail down agreements with top movie studios providing new releases for rent. On top of all that is the threat of a bankruptcy declaration hanging over brick-and-mortar Blockbuster.
Nuti worked to calm analyst fears, saying the entertainment group should break even in the fourth quarter, and that NCR has good relations with most of the movie studios as negotiations continue. Additionally, NCR's expansion of Blockbuster-branded kiosks can move forward whether that firm is in bankruptcy court or not, he said.
As part of its quarterly announcement NCR reiterated several of its recent kiosk-related successes. It launched the NetKey Loyalty Kiosk, designed to help retailers expand their frequent shopper programs across the storefront, online and mobile device channels.
In the travel sector, NCR introduced its enhanced NCR Hotel Solution, a simplified self-service check-in program. And in healthcare, the Valley Health System, a subsidiary of Universal Health Services Inc., implemented NCR MediKiosk at all five of its hospital locations.
TouchscreensDVD RentalEntertainment & GamingDVD KiosksSupermarkets & GroceryFull-Service ProvidersRetailNCR Corporation
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